US Secretary of State Mike Pompeo warned Tuesday that America and its Gulf Arab allies want to show Iran that its actions have “a real high cost” after Tehran threatened to disrupt Mideast oil supplies. Pompeo's comments came during a short trip to the United Arab Emirates.
“We deny Iran the financial capacity to continue this bad behavior,” Pompeo said, “so it's a broad range, a series of sanctions aimed not at the Iranian people, but rather aimed at the single mission of convincing the Iranian regime that its malign behavior is unacceptable and has a real high cost for them.”
Pompeo discussed the recent threats by Iranian President Hassan Rouhani over the Strait of Hormuz, through which a third of all oil traded by sea passes. While in Europe last week, Rouhani said any disruption to Iran's oil exports would result in the whole region's exports being disrupted.
Iran “should know that America is committed to keeping sea lines open, keeping the transit of oil available for the entire world,” Pompeo said. “That's the commitment we have had for decades. We continue under that commitment.”
Global oil prices rose following expectations that the US would push its allies to stop importing Iranian crude oil, further tightening the world energy supplies. While allies like Saudi Arabia, the UAE and Kuwait said they were willing to increase their own production as necessary, additional output may not be enough to satiate demand.
Already, gasoline prices have increased earlier this year in the US from $2.26 to $2.86 a gallon, according to AAA. Trump himself has been tweeting that oil suppliers must do more to lower prices ahead of midterm elections this fall. US benchmark crude traded near $75 a barrel on Tuesday, while Brent crude traded near $80.
While State Department officials acknowledged earlier that some allies will get waivers to continue importing Iranian oil, Pompeo added that such imports largely would be “sanctionable activity and we will enforce those sanctions.”
“We will consider (waivers) but make no mistake about it: We are determined to convince the Iranian leadership that this malign behavior won't be rewarded and that the economic situation in the country will not be permitted to be rectified until such time that they become a more-normal nation,” he said.